Perseverance is one of the most important attributes of successful executives. Almost every business objective is met with a myriad of obstacles which require persistence to break through. Sometimes, however, despite decades of dogged focus and effort, the goal remains elusive, and the approach seems to be delivering diminishing returns.
Last month, I described the change in the world around us in terms of overlapping S-curves. Every successful technology, from steam engines through to 5G, goes through a slow start, a rapidly accelerating middle, and a drawn-out, slowing, conclusion. When the steam engine was at its zenith in the mid-nineteenth century, engineers imagined a future with steam solving every imaginable problem. By the early twentieth century a new S-curve of the internal combustion engine had taken over and steam engines were experiencing the logarithmic slowing that marks the top of the curve.
It is useful to use this model both at a macro level for the major forces of technological and social change, such as the adoption of the Internet and the automation of many aspects of our daily lives, as well as for each of the individual technologies enabling these changes such as batteries, artificial intelligence (AI) and even blockchain.
As the world looks to move past fossil fuels, there are massive investments being made in both the green production and, just importantly, storage of power. The journey from polluting to environmentally sustainable energy being used at home and on our daily commute seems to be gathering pace, but it has been a frustratingly drawn-out journey. Each component of this change from the generation of solar and wind power through transmission and storage for the grid and powering individual electric vehicles is its own S-curve. Where they are in that curve will define the companies, and their investors, who history will record as the heroes and those that will lose their money.
For example, the chemical battery was discovered around the turn of the nineteenth century and the fundamental chemical principles of even the most advanced batteries today are basically the same as every high school chemistry student has studied for two hundred years. While there is a constant race to find new combinations of compounds with increasingly higher energy densities, and the price to energy ratio continues to drop, it is hard not to see this technology as potentially being at the top of the S-curve awaiting a more radical breakthrough.
Those that agree with this view of the S-curve aren’t waiting. Many companies are betting on hydrogen, with its massive energy density, but neither its efficient green production nor its convenient transportation have been comprehensively demonstrated. Fascinatingly, the US Navy have picked another storage technology altogether to power their laser weapon development: flywheels. Mechanical batteries consisting of a flywheel storing energy until it is needed have been applied in a variety of settings for many years and the latest technology is well suited to the needs of this project.
The cleaner world of our fourth industrial revolution is also more complex and requires the support that AI promises to provide to avoid overwhelming us mere humans. The AI journey began early in the second half of the twentieth century with rules-based machine learning algorithms of increasing complexity. I remember excitedly playing with a simple implementation of Joseph Weizenbaum’s ELIZA in the 1980s. Anything seemed possible, but the approach could never do more than show promise as solving natural language and other important real-world problems remained elusive.
It was clear by the 1990s that AI progress had slowed, consistent with the approach having reached the top of the curve, and fundamentally new approaches were needed. Those companies that continued to bet their futures on the slowing technology growth were disrupted. Those that saw this as the foundation of something new, created what we now know as the information and knowledge management solutions that are embedded in most of our working lives. However, a new S-curve kicked-off in the last couple of decades with the massive increase of data being collected and advances in data analytics to exploit it.
Those that are frustrated by the challenges developing autonomous vehicles and health solutions in the real-world using this new generation of AI could do worse then look back at ELIZA and the end of the last AI S-curve and wonder whether their current frustrations are simply obstacles to be pushed through or the limitations of an approach near the top of its S-curve.
Similarly, the twenty-first century has already seen three financial shocks and the emergence of new approaches to managing our global economies which seem to be providing diminishing returns. Many wonder if the future really does belong to government regulated markets which has opened the way for blockchain to explode into the public consciousness, anchored by excitement over cryptocurrency. The challenge for governments is to work out how the maturing crypto world will slot into the historically strongly regulated financial services market.
Despite the continued growth in value of crypto assets, the implementation of other blockchain solutions has slowed and some argue it is nearing the top of its S-curve. The predicted migration to blockchain for everything from government services to consumer contracts has simply not happened. Arguably the only materially new innovation in blockchain to gain any engagement has been the invention of non-fungible tokens (NFTs), a potential S-curve in their own right that have only the loosest association to blockchain itself.
While it is difficult for most of us to think about the next S-curve as we are focused on our current obstacles and demonstrating the perseverance that has fuelled our success, it is important to be on the constant lookout for unexpected alternative approaches. Truly innovative organisations experiment on the side just in case they stumble across the technology that will smash through the final intractable obstacles to their success.